In today’s competitive market, companies increasingly rely on line sales — a push-sales model where sellers carry goods directly to customers’ doorsteps. Common in FMCG, beverages, bakery, dairy, and tobacco products, line sales allow sales representatives to visit small vendors and retail outlets with stock in hand, selling only what the customer agrees to buy on the spot.
Despite its prevalence, there is limited formal guidance on how line sales are treated under GST. This article covers the full compliance picture: from e-way bill generation to treatment of unsold goods and the applicable departmental clarifications.
What Are Line Sales?
Line sales are essentially sales on approval — goods are transported to the customer’s premises without an immediate transfer of ownership. The risks and rewards remain with the supplier until the sale is confirmed. Because no supply has occurred at the time of transport, a tax invoice cannot be issued upfront.
The GST e-way bill portal recognises this explicitly — “Line Sales” appears as a distinct sub-type under outward transactions.
GST Treatment During Transport
Since goods move without a transfer of ownership, they must be transported under a delivery challan (not a tax invoice). If the value of goods exceeds ₹50,000, an e-way bill (EWB) must be generated by the supplier before movement begins.
E-Way Bill Configuration for Line Sales
| Field | Required Value |
|---|---|
| Supply Type | Outwards |
| Sub-type | Line Sales |
| Document Type | Delivery Challan |
| Transaction Type | Regular |
| Bill From | Supplier’s own GSTIN |
| Ship From | Place of business from where goods are dispatched |
| Bill To | Self GSTIN (supplier bills to themselves) |
| Ship To | Last known delivery point (e.g. last shop in the destination area) |
| Value of Goods | Cost plus margin, per Explanation 2 of Rule 138(1) |
Important: When “Line Sales” is selected as the sub-type, the EWB portal caps the maximum permitted distance at 300 km. Movement beyond 300 km requires a different approach or separate documentation.
Treatment of Sold and Unsold Goods
When goods are sold, the supplier issues a tax invoice or bill of supply at the point of sale — either from a manual bill book, a POS machine, or a handheld device. These invoices can be synced with the ERP system in real time or reconciled at end of day.
Where e-invoicing is applicable, B2B invoices must be e-invoiced and issued to the recipient accordingly.
When goods are unsold, they are simply returned to the supplier’s place of business and restocked. No sales entry or financial entry is recorded. If the ERP had recorded a stock-out on dispatch, a corresponding stock-in entry must be made for the returned quantity.
Departmental Clarification — Circular 10/10/2017-GST
The CBIC issued Circular No. 10/10/2017-GST dated 18 October 2017 to clarify the treatment of goods moved for supply on approval:
Goods taken for supply on approval can be moved from the registered supplier’s place of business to another location within the same state, or to a place outside the state, on a delivery challan along with the applicable e-way bill. The invoice may be issued at the time of delivery. The person carrying the goods may carry an invoice book to issue invoices once supply is confirmed.
Where goods are carried from one state to another and supplied in a different state, such supplies are treated as inter-state supplies and attract IGST.
FAQ — EWB for Multi-Drop FMCG Distribution
Q: A manufacturer dispatches a truck to supply multiple kirana stores in an area. The recipients are unknown at dispatch. How should EWB be handled?
In such cases, movement is on behalf of the supplier — no supply is being made at the time of dispatch. A delivery challan should be used to generate the e-way bill. All delivery challan requirements and e-way bill rules apply as normal.
Key Takeaways
- Goods in transit for line sales are not yet sold — delivery challan + EWB (if value > ₹50,000), not a tax invoice
- EWB sub-type “Line Sales” limits movement to 300 km
- Unsold goods returned to stock require no financial entry — only an ERP stock-in entry if applicable
- Inter-state line sales attract IGST at the point of supply confirmation
- E-invoice obligations apply to B2B sales finalised during the route
For guidance on e-way bill compliance, delivery challan documentation, or GST advisory for distribution-heavy businesses, get in touch with our team.